SEOUL, Sept. 28 (Yonhap) -- The 2011 budget plan proposed by South Korea's government on Tuesday highlights its efforts to shore up fiscal soundness and boost welfare spending aimed at supporting low- and middle-income earners.

Earlier in the day, the government endorsed a 5.7 percent increase in budget spending for next year, saying that a marked share of the increased expenditure will be used in strengthening the nation's health and welfare system.

Under the spending plans, the state is expected to log a consolidated fiscal surplus of 5 trillion won next year, compared with this year's estimated fiscal deficit of 2 trillion won (US$1.74 billion).

In 2009, the country reported a consolidated fiscal deficit of 17.6 trillion won as budget spending increased sharply to shore up falling economic growth in the wake of the global financial meltdown.

"The budget plan calls for efforts to improve overall fiscal soundness as the economy is on a normal track," said an official at the finance ministry. "But budget spending on new growth engines will continue as well."

The official said the economy is recovering at a faster-than-expected pace, which will help improve fiscal soundness.

The South Korean economy, Asia's fourth-largest, is rebounding from a steep downturn caused by the financial turbulence and resulting global recession, on the back of the government-led stimulus measures and aggressive reduction in borrowing costs by the central bank.

The finance ministry said that the fiscal deficit for 2011 can be reduced to 2 percent of the gross domestic product (GDP) from 2.7 percent at present.

The level of national debt to the GDP will also be reduced to 35.2 percent from the 36.1 percent expected for this year, it said.

In order to help enhance the fiscal status, the ministry said that it will work "actively" to streamline and enhance the effectiveness of the nation's overall spending process and reduce tax benefits deemed to be "unreasonable." The ministry also aims to lower the debt-to-GDP ratio to the mid-30 percent range by 2013.

Also, a marked share of next year's budget spending will be allocated to improve the living standards of low- and middle-income earners, the spending plans showed.

According to the budget plans, the government will spend 86.3 trillion won on the health, social welfare and labor sectors next year, up 6.2 percent, or 5 trillion won, from this year.

The spending will be focused on expanding free childcare services and educational support to encourage people to have more children.

South Korea had the lowest birthrate in the world in 2009 with the average woman giving birth to just 1.15 children in her lifetime, which is lower than the 1.71 for the Organization for Economic Cooperation and Development countries. Low birthrates can limit a country's economic growth potential down the road and increase welfare spending.

"More policies will be mapped out to help low- and middle-income earners directly feel the effect of the economic recovery," said the official.